Try to change the order in your manifest txt file so the XML file will be executed after the lua file of the addon.
Otherwise the "OnUpdate" funciton is not globally known for the XML I guess.
Code:
## APIVersion: 100016 100017
## Title: Combat Reticle
## Description: Customizable context-senstitve reticle
## Version: 1.5.1
## Author: Aetheron, updated by |c4EFFF6Calia1120|r
## OptionalDependsOn: LibAddonMenu-2.0
## SavedVariables: CombatReticle_Settings
## Libraries:
Libs/LibStub/LibStub.lua
Libs/LibAddonMenu-2.0/LibAddonMenu-2.0.lua
## Core:
CombatReticle.lua
CombatReticle.xml
CombatReticleSettings.lua
CombatReticleThemes.lua
Bindings/Bindings.xml
Bindings/Bindings.lua